Natural gas prices plummeted today, with the prompt month February contract plunging over 4% on the day.
This came as the Energy Information Administration announced that for the week ending early last Friday, December 29th, natural gas stockpiles decreased by 209 bcf.
That is certainly a sizable withdrawal, as it came in far larger than the 5-year average and other comparable years for the same week.
Yet on a weather-adjusted basis it was looser compared to the last 10 weeks, thanks in part to demand reductions over the Christmas holiday, and historically looks fairly loose as well (as shown in our EIA Rapid Release to clients, sent out within 15 minutes following the data release).
The result was that we saw the number as a miss and warned clients that it was slightly bearish.
Prices initially held on, but a warmer run of the afternoon GEFS weather model quickly pulled them lower. This is something we had expected through the week, as in our flagship Natural Gas Weekly report published on Tuesday we explained that there was far more downside than upside for natural gas prices this week (something we also warned of last Friday).
We followed that up in our Morning Update today, where we warned that afternoon model guidance was at risk of turning more bearish and pulling prices lower towards $2.92 (which eventually broke this afternoon).
Sure enough, we saw the GFS ensembles trend warmer this afternoon both in the medium-term and longer-term, as seen below (graphics courtesy of the Penn State E-Wall).
This only compounded what we saw as a bearish technical signal yesterday in our Note of the Day.
Sure enough, H/J pulled back decently today as well on these warmer risks.
